Negotiator's framework negotiate to win
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The Key to Success in Negotiation is to have a systematic approach. This Negotiator's Framework -> gives you a direction to guide or lead through the negotiation; helps you evaluate offers and propose counter offers. In a nutshell, the framework offers a disciplined approach to negotiation.
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Negotiator's framework negotiate to win
- 1. Negotiating to Win© Arvind Maharajan Negotiator’s Framework Creating a framework to walk through negotiations
- 2. Negotiating to Win© Arvind Maharajan What are we going to learn today? When will a framework be successful? Your research needs to be exhaustive and accurate You need to be disciplined to adhere to the plan What is a framework? System of checks and balances Gives you a direction to guide or lead through the negotiation Helps you evaluate offers and propose counter offers
- 3. Negotiating to Win© Arvind Maharajan Let us learn the framework through a case study
- 4. Negotiating to Win© Arvind Maharajan Case Study: Harmony Hills You are the Director of Summit Estate Harmony Hills in Gurgaon A 5 acre prime property Posted an ad for selling Harmony Hills You have received interest from two prospective buyers -Realty Developers -Prime Estate
- 5. Negotiating to Win© Arvind Maharajan Case Study: Harmony Hills Realty Developers Builds High Rise Apartments Fair Negotiators Offer Rs.30 Crores ( 5 Mn USD) Offer Expires in one week Fair offer by market standards Prime Estate Premier real estate company Builds only premium end villas Offer Not made any offer Offer CEO has called you tomorrow for discussions
- 6. Negotiating to Win© Arvind Maharajan Case Study: Harmony Hills Harmony Hills was bought by you 5 years back for 19 crores (3 MN USD) You are confident that Realty Developers and Prime Estate know this fact Land deals for villa projects are typically priced 20% more than the case for apartment projects The offer from Realty Developers is at par with market but you think you can get 10% more FACTS
- 7. Negotiating to Win© Arvind Maharajan The Negotiation Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal
- 8. Negotiating to Win© Arvind Maharajan The Negotiation Framework Step 1: Assess your BATNA BATNA: Best Alternative To a Negotiated Agreement What will you do if this negotiation does not work out? What’s Plan B? For your negotiation with Prime Estate, what’s your BATNA? Make a deal with Realty Developers 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal
- 9. Negotiating to Win© Arvind Maharajan The Negotiation Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal Step 2: Calculate your Reservation Value Reservation Value: Your walkaway point in the current negotiation What is the minimum that you need from this negotiation? Anything below is unacceptable For your negotiation with Prime Estate, what’s your Reservation Value? The offer from Realty Developers + 10% more which amounts to 33cr (5.5 MN USD) A correct assessment of your BATNA is essential to know your Reservation Value
- 10. Negotiating to Win© Arvind Maharajan The Negotiation Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal Step 3: Assess the other party’s BATNA What are the other options for your negotiating opponent Involves a lot of research on your opponent and careful assessment of market conditions For your negotiation with Prime Estate, what’s their BATNA? To develop their villa project on another piece of land in Gurgaon What are the similar land holdings in Gurgaon and what would be they selling at?
- 11. Negotiating to Win© Arvind Maharajan The Negotiation Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal Step 4: Calculate the other party’s Reservation Value Your negotiating opponent’s walkaway point in the current negotiation What is the maximum that they can give you from this negotiation? Anything beyond is unacceptable for them For your negotiation with Prime Estate, what’s their Reservation Value? The market price is 30 Cr (5MN USD) and they would think of maximum 10% appreciation i.e 33 Cr (5.5 MN USD) Villa projects can get a premium of 20% more, i.e. 33 Cr + 20% Reservation Value = 39.6 Cr (6.6 MN USD)
- 12. Negotiating to Win© Arvind Maharajan The Negotiation Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal Step 5: Frame ZOPA ZOPA: Zone of Potential Agreement Minimum Amount You want Max Amt. you think you can get (Your RV) (Opponent’s RV) 33Cr to 39.6 Cr Your RV 33 Cr (5.5 MN USD) Prime Estate RV 39.6 Cr (6.6 MN USD) ZOPA
- 13. Negotiating to Win© Arvind Maharajan The Negotiation Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal Step 6: Closing the deal: Negotiate to get a deal within your ZOPA Choose an opening strategy: Most common is to start by aiming at the higher end of the ZOPA and then negotiate your way down
- 14. Negotiating to Win© Arvind Maharajan RECAP : The Framework 1 2 3 4 5 6 Assess your BATNA Calculate your RV Assess opponent’s BATNA Calculate Opponent’s RV Frame your ZOPA Close the Deal